Which of the Following Statements Is Most Correct

question 3

Multiple Choice

Which of the following statements is most correct?

• A) Firms that try to maximize their stock values will tend to lay off employees to cut costs.
• B) Firms that try to maximize their stock values will raise the prices of their products, gouging customers and driving them away.
• C) Anti-pollution laws are unnecessary because firms will choose not to pollute because that is in their best interests.
• D) The government should allow monopolies to operate without regulation so that they may maximize their shareholders' wealth.
• E) Newly-privatized firms generally hire more employees.

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Definitions:

Average Fixed Cost Curve

A graphical representation showing how the average fixed cost per unit changes as the quantity of output produced changes.

Minimum Point

The minimum point refers to the lowest value of a function, often found in mathematical optimization and related fields.

Marginal Cost

The rise in overall expenses associated with the manufacturing of an extra unit of a good or service.

Average Cost

The total cost of production divided by the number of units produced, a measure of the cost per unit.